March 24, 2015

Highway BR-163 Improvements essential for Growth in Mato Grosso

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Transportation costs into and out of the state of Mato Grosso, which is the largest grain producing state in Brazil, accounts for approximately 30% of the value of the raw products produced in the state. The Agricultural and Livestock Federation of Mato Grosso (Famato) indicated that 69% of the grain produced in the state moves by truck along highway BR-163 at a high cost to both producers and consumers. They feel the proposed highway improvements will not only reduce costs for producers, but it will also attract other agricultural related industries to the state.

Over the next five years, R$ 2.8 billion reals will be spent turning 800 kilometers of BR-163 from a two lane highway full of potholes into a modern four-lane highway. The widening will start at the border of Mato Grosso and Mato Grosso do Sul and end at the northern city of Sinop. In the process of widening the highway, it will also be turned into a toll road in order to pay for the project. The entire project is expected to take five years to complete. The Mato Grosso Institute of Agricultural Economics (Imea) estimates that transportation costs in the state will be lowered by 11% once the project is completed including the costs of the tolls.

The Brazilian Association of Vegetable Oil Industries (Abiove) has indicated that a majority of the soybeans produced in the state are exported and that the development of new soybean crushing facilities and related industries will depend in part on the completion of the highway improvements.

The state of Mato Grosso is the leader in soybean crushing in Brazil with an installed capacity of 40,000 tons per day, but it trails other states in Brazil when it comes to the production of higher value added products. Imea estimates that by the year 2022, the grain production in the state will increase by 40% to 67.7 million tons and a modern highway will be essential to move the grain as cheaply as possible to end users. Approximately 58% of that anticipated grain production in 2022 will be soybeans.